The quality of life is the third major task area for management. Managements of all institutions are responsible for their by-products, that is, the impacts of their legitimate activities on people and on the physical and social environment. They are increasingly expected to anticipate and resolve social problems. They need to think through and develop new policies for the relationship of business and government, which is rapidly outgrowing traditional theories and habits.

Social problems, such as a deteriorating education system, by contrast are dysfunctions of society rather than impacts of the organization and its activities. Since the institution can only exist within the social environment and is indeed an organ of society, such social problems can affect the institution.

The first job of management is, therefore, to identify and anticipate impacts coldly and realistically. The question is: "Is what we do right, in the best interest of the customer and society?" And if our social impacts are not right, it is the responsibility of the company to educate the customer and society so that the negative impact can be eliminated.

Social Problems as Business Opportunities

Social problems are dysfunctions of society and at least potentially degenerative diseases of the body politic. They are ills. But for the management of institutions and, above all, for business management, they represent challenges. They are major sources of opportunity. For it is the function of business and to a lesser degree the other main institutions to satisfy social need and at the same time serve their institution, by making resolution of a social problem into a business opportunity.

It is the job of business to convert change into innovation, that is, into new business.

Social change and social innovation have, throughout business history, been at least as important as technology. After all, the major industries of the nineteenth century were, to a very large extent, the result of converting the new social environment the industrial city into a business opportunity and into a business market.

The most significant opportunities for converting social problems into business opportunities may, therefore, not lie in new technologies, new products, and new services. They may lie in solving the social problem, that is, in social innovation that then directly and indirectly benefits and strengthens the company or industry. Page 216

To take on tasks for which one lacks competence is irresponsible behavior. It is also cruel. It raises expectations that will then be disappointed. An institution, and especially a business enterprise, has to acquire whatever competence is needed to take responsibility for its impacts. But in areas of social responsibility other than impacts, right and duty to act are limited by competence. Page 218

No one is America has done very well in training hard-core unemployed African American teenagers for work and jobs. But business has done far less badly than any other institution: schools, government programs, community agencies. This task can be identified. It can be defined. Goals can be set. And performance can be measured. Then business can perform.